Correlation Between SCI Information and Digital Power
Can any of the company-specific risk be diversified away by investing in both SCI Information and Digital Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SCI Information and Digital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and Digital Power Communications, you can compare the effects of market volatilities on SCI Information and Digital Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SCI Information with a short position of Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and Digital Power.
Diversification Opportunities for SCI Information and Digital Power
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SCI and Digital is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun and SCI Information is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SCI Information Service are associated (or correlated) with Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of SCI Information i.e., SCI Information and Digital Power go up and down completely randomly.
Pair Corralation between SCI Information and Digital Power
Assuming the 90 days trading horizon SCI Information Service is expected to generate 1.64 times more return on investment than Digital Power. However, SCI Information is 1.64 times more volatile than Digital Power Communications. It trades about -0.04 of its potential returns per unit of risk. Digital Power Communications is currently generating about -0.3 per unit of risk. If you would invest 231,000 in SCI Information Service on October 25, 2024 and sell it today you would lose (3,500) from holding SCI Information Service or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. Digital Power Communications
Performance |
| Timeline |
| SCI Information Service |
| Digital Power Commun |
SCI Information and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and Digital Power
The main advantage of trading using opposite SCI Information and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, Digital Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Digital Power will offset losses from the drop in Digital Power's long position.| SCI Information vs. SeAH Besteel Corp | SCI Information vs. Jeju Air Co | SCI Information vs. Wonil Special Steel | SCI Information vs. Korean Air Lines |
| Digital Power vs. KB Financial Group | Digital Power vs. Shinhan Financial Group | Digital Power vs. Hana Financial | Digital Power vs. Woori Financial Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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